The domestic opportunity could be worth up to $10 billion by 2012, projects outsourcing advisory firm the Everest Group, with BPO accounting for about half of that.

India's insurance industry will see major growth over the next three years, from the current $10.2 billion to $60.5 billion, according to an industry group, making it tough for Indian insurers to staff up enough to meet the demand.

The Everest Group notes that Indian outsourcing providers, facing stiff competition from the likes of IBM, will need to tweak their capabilities and consider different financial models such as output-based pricing.

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